Disney (and others) at the Box Office - Current State of Affairs

[LSLS]

I don't understand. If the outlook isn't significant (not "gloom," "not at a fast pace," and "by design"), why is Disney (and every other studio) risking their entire businesses on pivoting to Direct-to-Consumer? And why are they making and releasing fewer films for theatrical release?

(Again, not looking for a debate, just interested in understanding the perspective of those who seem to think box office is going to get back on track, or that Disney should stick to the old model (theatrical releases, long box office windows before moving to streaming, artificial scarcity, etc.)

Nah, this is a good discussion, and I think your questions are very valid. For the record, I'm not one that is going to tell you it is for sure going to get back to where it was. What I do question though, is if it's all studios getting hammered now, or if it's just Disney. Basically, my thought (and my guess, so take it for what it's worth) is we have a combination of costs preventing people from going to movies as much as they used to along with some studios (Disney) having a VERY predictable release schedule for when you can watch it for free.

So, to your question. I'm not sure streaming was created to supplant the box office. I think the draw was to replace the television drop off more than the box office, along with the rental market. Now, the pandemic kind of changed everything. But, I'm not sure they thought the switch would make these kind of effects. My guess is the thought was it might cut some of their DVD sales, but I'd bet those had been dropping pretty rapidly in favor of rentals on things such as Prime anyways as streaming has increased. So, if it is linked to movies, I think the thought process was it would take out the Prime rentals after it had made it's box office, not take away from the box office (at least when these things were being conceived). I don't think they counted on people almost pricing out of going to lots of movies in a year, and I really don't think they anticipated people getting used to just watching from home (especially if they were on the fence).

But, let me ask you the same kind of question. If Disney was anticipating declines in movies, and large declines after the pandemic, why were they green lighting more and more movies costing over $200 million in budget? If the thought was that the movie theater takes were drastically shrinking, wouldn't you cut back your production costs to account for that? It's not like a lot of these movies are bringing in large influxes of subscriptions to cover the costs of the production. Sure, you could make one or two and handle the loss. But what did they have, 7 at that threshold this year?

 

[Vegas Disney Fan]

I don't understand. If the outlook isn't significant (not "gloom," "not at a fast pace," and "by design"), why is Disney (and every other studio) risking their entire businesses on pivoting to Direct-to-Consumer? And why are they making and releasing fewer films for theatrical release?

I think steaming is meant to replace cable, not theaters.

Ticket sales have been trending down but theater revenue was steadily increasing prior to Covid, I think Covid caused Disney to take a calculated risk and quickly release movies on D+ to increase subscriptions, I think they just underestimated how much that would hurt theaters once the world started returning to normal. They probably should have gone back to a 6 month release window over a year ago, now they’ve got people used to waiting and they need to break that habit.

 

[Disney Irish]

Nah, this is a good discussion, and I think your questions are very valid. For the record, I'm not one that is going to tell you it is for sure going to get back to where it was. What I do question though, is if it's all studios getting hammered now, or if it's just Disney. Basically, my thought (and my guess, so take it for what it's worth) is we have a combination of costs preventing people from going to movies as much as they used to along with some studios (Disney) having a VERY predictable release schedule for when you can watch it for free.

So, to your question. I'm not sure streaming was created to supplant the box office. I think the draw was to replace the television drop off more than the box office, along with the rental market. Now, the pandemic kind of changed everything. But, I'm not sure they thought the switch would make these kind of effects. My guess is the thought was it might cut some of their DVD sales, but I'd bet those had been dropping pretty rapidly in favor of rentals on things such as Prime anyways as streaming has increased. So, if it is linked to movies, I think the thought process was it would take out the Prime rentals after it had made it's box office, not take away from the box office (at least when these things were being conceived). I don't think they counted on people almost pricing out of going to lots of movies in a year, and I really don't think they anticipated people getting used to just watching from home (especially if they were on the fence).

But, let me ask you the same kind of question. If Disney was anticipating declines in movies, and large declines after the pandemic, why were they green lighting more and more movies costing over $200 million in budget? If the thought was that the movie theater takes were drastically shrinking, wouldn't you cut back your production costs to account for that? It's not like a lot of these movies are bringing in large influxes of subscriptions to cover the costs of the production. Sure, you could make one or two and handle the loss. But what did they have, 7 at that threshold this year?

I'll take a stab at your question, most of those $200M budgets were greenlit pre-pandemic when the anticipation was still to have a viable box office in the short to medium term. Hard to curb budgets when a majority of your projects happen in 3-4 year cycles. For example production began for Wish in 2018, so the budget would have been set by 2019 at the latest.

So the newer lower budget requirements didn't come into play until after production started again post-pandemic. They had to get the more larger budget films out of the system first though. It just happens that Disney pre-pandemic went all-in on the large tent pole films, so there were a lot of them.

Notice for example that Haunting in Venice had a low $60M budget, it was greenlit by Disney post-pandemic in 2022. You're starting to see the newer lower budgets making its way through the studio system now. And we've seen the articles about the MCU starting to change its process, so those will get lower budgets too.

 

[flynnibus]

If 2023 had less money and people coming in than 2021 or 2022, or stayed stagnant, you may have a case. It has only grown.
More people are going to theaters than 2020, 2021 and 2022. Things are getting better, making more money than those other years. Not less.

Up Millions in attendance and over a billion up this year in revenue. No sign of anything but growing so far.

Come on man... this chart is not good... no matter what the small upward tail is

 

[LSLS]

I'll take a stab at your question, most of those $200M budgets were greenlit pre-pandemic when the anticipation was still to have a viable box office in the short to medium term. Hard to curb budgets when a majority of your projects happen in 3-4 year cycles. For example production began for Wish in 2018, so the budget would have been set by 2019 at the latest.

So the newer lower budget requirements didn't come into play until after production started again post-pandemic. They had to get the more larger budget films out of the system first though. It just happens that Disney pre-pandemic went all-in on the large tent pole films, so there were a lot of them.

Notice for example that Haunting in Venice had a low $60M budget, it was greenlit by Disney post-pandemic in 2022. You're starting to see the newer lower budgets making its way through the studio system now. And we've seen the articles about the MCU starting to change its process, so those will get lower budgets too.

Sure, but they were also greenlit when the streaming services were being built and planned for rollout (or even had just been rolled out), so if they thought the box office was dying and streaming would replace it, wouldn't they have been bringing in the budget costs instead of doubling down on them?

 

[_caleb]

Nah, this is a good discussion, and I think your questions are very valid. For the record, I'm not one that is going to tell you it is for sure going to get back to where it was. What I do question though, is if it's all studios getting hammered now, or if it's just Disney. Basically, my thought (and my guess, so take it for what it's worth) is we have a combination of costs preventing people from going to movies as much as they used to along with some studios (Disney) having a VERY predictable release schedule for when you can watch it for free.

So, to your question. I'm not sure streaming was created to supplant the box office. I think the draw was to replace the television drop off more than the box office, along with the rental market. Now, the pandemic kind of changed everything. But, I'm not sure they thought the switch would make these kind of effects. My guess is the thought was it might cut some of their DVD sales, but I'd bet those had been dropping pretty rapidly in favor of rentals on things such as Prime anyways as streaming has increased. So, if it is linked to movies, I think the thought process was it would take out the Prime rentals after it had made it's box office, not take away from the box office (at least when these things were being conceived). I don't think they counted on people almost pricing out of going to lots of movies in a year, and I really don't think they anticipated people getting used to just watching from home (especially if they were on the fence).

Makes sense. Thanks for articulating this. I agree that television/linear and declining DVD sales were major factors in Disney's move to streaming. It just seems strange to me that Disney–with all their data and consumer insights–wouldn't see the potential negative impact on box office coming.

That said, even with all their data and projections, I don't think Disney knows (I don't think anyone does) what the movie business is going to look like in this next phase.

But, let me ask you the same kind of question. If Disney was anticipating declines in movies, and large declines after the pandemic, why were they green lighting more and more movies costing over $200 million in budget? If the thought was that the movie theater takes were drastically shrinking, wouldn't you cut back your production costs to account for that? It's not like a lot of these movies are bringing in large influxes of subscriptions to cover the costs of the production. Sure, you could make one or two and handle the loss. But what did they have, 7 at that threshold this year?

I think Disney's data has shown them the magnitude of the shift in consumer behavior and it was so compelling and undeniable, they literally risked the entire company to shift its focus to Direct-to-Consumer which, by definition, entails cutting out the middlemen– including theaters.

To help ensure the success of D+ as being more than just Disney-channel-quality content, they used their big-budget moviemaking apparatus to keep churning out content geared toward building the Disney+ subscriber base. They know (and have known) they'd eventually have to spend a lot less on content, but they couldn't do that early or all at once, lest it hurt public reception of Disney+.

Again, I'm not saying Disney is pulling out of theater releases. They're just looking well beyond that when it comes to making movies because they're building a library they think will attract and keep subscribers.

The downward trend isn't drastic, but it's steady and inevitable. So Disney is transitioning from its primary focus being on box office to its primary focus being Direct-to-Consumer with box office being one possible cost-offsetting stop along the way. With the subscription model, content is pre-paid-for by subscribers. Individual films no longer have to attract their own audiences or make profit individually, they just have to work with all the other content to all add up to a library that attracts and keeps subscribers.

 

[Disney Irish]

Sure, but they were also greenlit when the streaming services were being built and planned for rollout (or even had just been rolled out), so if they thought the box office was dying and streaming would replace it, wouldn't they have been bringing in the budget costs instead of doubling down on them?

The idea back in 2018/2019 was that streaming would compliment the box office, it would been seen as a natural extension of the post-theatrical market. And so they were still budgeting theatrical as if there wouldn't be a disruption in the short to medium term. And that any offsets in the longer term would be seen as part of the normal downward trend in the overall tickets sales that the market had been experiencing for the last two decades. Remember the idea was that it would take 5 years for streaming to get into profitability, ie content spend was always part of the equation including normal content buys for theatrical type content but at lower budgets. Remember the Lady and the Tramp remake that debuted on the service, it was only a $60M budget. So they were making lower budget movies that could be seen as theatrical offerings for D+. And so the plan was release normal tent poles with higher budgets to theaters and release the lower budget stuff to D+. It just wasn't known what was coming a mere 6 months after release of D+.

Then everything changed with the pandemic when streaming was the only game in town, and unknown what the theatrical market would look like post-pandemic or even if there would be one. This caused disruption and we are where we are now.

Where things go from here, well that continues to remain to be seen. But to me its clear that again the box office is just not going likely get back to pre-pandemic levels. Disney will go back to more reasonable budgets for theatrical and will find a happy medium between theatrical and streaming. And that they have positioned themselves to being able to handle further disruption to the theatrical market if and when it happens.

 

[TP2000]

The idea back in 2018/2019 was that streaming would compliment the box office, it would been seen as a natural extension of the post-theatrical market.

The idea back in 2018 was that streaming would replace the old Blockbuster Video store that was now a Starbucks.

Then Disney royally screwed that up and made very bad business decisions, trying to make streaming replace the physical movie theater for their tentpoles but not reducing movie budgets to account for that. Repeatedly.

And here we are in Fiscal Year 2024 and Disney+ is still losing them hundreds of millions of dollars every 90 days. Meanwhile, at the physical movie theaters, Disney movies are on track to lose over $1 Billion in 2023. Oops!

 

[Disney Irish]

The idea back in 2018 was that streaming would replace the old Blockbuster Video store that was now a Starbucks.

Then Disney royally screwed that up and made very bad business decisions, trying to make streaming replace the physical movie theater for their tentpoles but not reducing movie budgets to account for that. Repeatedly.

And here we are in Fiscal Year 2024 and Disney+ is still losing them hundreds of millions of dollars every 90 days. Meanwhile, at the physical movie theaters, Disney movies are on track to lose over $1 Billion in 2023. Oops!

If that is the only thing you got from my posts, then you completely missed the point of everything that happened. Not only that but you are only partially correct in your assessment. Streaming was to supplant all of the dwindling post-theaterical market, which not only includes video rentals but also linear channels that were and continue to shrink quarterly due to cord cutting. And that still remains the case today.

Looking back in hindsight is always going to provide clarity on a situation. However in the moment decisions were made to try to savage what they could out of a bad unknown situation in order to keep operations running. There were real concerns back in 2020, you even posted over and over about in the DLR forum, how Disney could have gone bankrupt due to the huge exposure to the consumer market that may or may not have recovered. It was unknown at the time if and when that recovery was to take place, what it would look like post-pandemic.

So its easy now to say, yeah they should have done this or they should have done that. But if things went a different way we could have just as easily been talking today about a Disney that no longer exists as a company.

Also D+ is still on target to reach profitability at the end of FY24, as planned since the beginning.

 

[LSLS]

The idea back in 2018/2019 was that streaming would compliment the box office, it would been seen as a natural extension of the post-theatrical market. And so they were still budgeting theatrical as if there wouldn't be a disruption in the short to medium term. And that any offsets in the longer term would be seen as part of the normal downward trend in the overall tickets sales that the market had been experiencing for the last two decades. Remember the idea was that it would take 5 years for streaming to get into profitability, ie content spend was always part of the equation including normal content buys for theatrical type content but at lower budgets. Remember the Lady and the Tramp remake that debuted on the service, it was only a $60M budget. So they were making lower budget movies that could be seen as theatrical offerings for D+. And so the plan was release normal tent poles with higher budgets to theaters and release the lower budget stuff to D+. It just wasn't known what was coming a mere 6 months after release of D+.

Then everything changed with the pandemic when streaming was the only game in town, and unknown what the theatrical market would look like post-pandemic or even if there would be one. This caused disruption and we are where we are now.

Where things go from here, well that continues to remain to be seen. But to me its clear that again the box office is just not going likely get back to pre-pandemic levels. Disney will go back to more reasonable budgets for theatrical and will find a happy medium between theatrical and streaming. And that they have positioned themselves to being able to handle further disruption to the theatrical market if and when it happens.

So unless I'm missreading, you kind of agree with me that streaming wasn't designed to take over the box office. That's kind of what Caleb and I were discussing (which is why I asked that question).

As for getting back to prepandemic levels, you 100% could be right. I feel like I'm kind of thrust into this idea that it will cause i dont think things were nearly as grim prepandemic and i (hopefully) am doing a good job keeping everything pretty civil in discussion. Truth is I'm not at all convinced of it. I think it COULD, but things need to happen. For starters, I think it would need to be priced back to something you could go to as a family more than every few months. I also think people need to be retrained that it's not going to be streaming in a few months. I think that gives you a better chance of getting people who are on the fence.

 

[Disney Irish]

So unless I'm missreading, you kind of agree with me that streaming wasn't designed to take over the box office. That's kind of what Caleb and I were discussing (which is why I asked that question).

As for getting back to prepandemic levels, you 100% could be right. I feel like I'm kind of thrust into this idea that it will cause i dont think things were nearly as grim prepandemic and i (hopefully) am doing a good job keeping everything pretty civil in discussion. Truth is I'm not at all convinced of it. I think it COULD, but things need to happen. For starters, I think it would need to be priced back to something you could go to as a family more than every few months. I also think people need to be retrained that it's not going to be streaming in a few months. I think that gives you a better chance of getting people who are on the fence.

I agree that at least initially streaming wasn't meant to completely replace the box office. However I do believe in a post-pandemic world that less importance is being given to the box office in the long term in favor of streaming. So in reality I think you both are correct, just from different perspectives.

Unfortunately retraining the audience is a myth overall in my opinion, and ticket prices are not going to go down. As once the audience knows they can just wait, they will continue to wait even if its just a bit longer. There will be event films that buck the trend, like the Barbie's or Mario's, but those are going to continue to be few and far between. And overall the number of tickets sold is just going to continue to be less than pre-pandemic levels in my opinion. There will become a new normalized box office, but it will just be a something that the industry will have to adjust for in the long run. And by all accounts most studios appear to be doing just that with either their own streaming services or partnering with a major streamer like Netflix.

 

[Basil of Baker Street]

Disney has been telling us for some time now that they are choosing DTC as their primary business (making box office secondary). They are doing both, but in a transition from prioritizing one to prioritizing the other.

DTC cant survive on $200m films. If they can't real the budgets in, they should pick one or the other.

 

[_caleb]

DTC cant survive on $200m films. If they can't real the budgets in, they should pick one or the other.

They are cutting costs for content. Irish said it well a couple posts ago:

I'll take a stab at your question, most of those $200M budgets were greenlit pre-pandemic when the anticipation was still to have a viable box office in the short to medium term. Hard to curb budgets when a majority of your projects happen in 3-4 year cycles. For example production began for Wish in 2018, so the budget would have been set by 2019 at the latest.

So the newer lower budget requirements didn't come into play until after production started again post-pandemic. They had to get the more larger budget films out of the system first though. It just happens that Disney pre-pandemic went all-in on the large tent pole films, so there were a lot of them.

Notice for example that Haunting in Venice had a low $60M budget, it was greenlit by Disney post-pandemic in 2022. You're starting to see the newer lower budgets making its way through the studio system now. And we've seen the articles about the MCU starting to change its process, so those will get lower budgets too.

But now we’re going to hear how Disney is cheaping out on its films, doesn’t feature enough big-name actors, and the special effects aren’t what they used to be.

 

[TP2000]

But now we’re going to hear how Disney is cheaping out on its films, doesn’t feature enough big-name actors, and the special effects aren’t what they used to be.

Huh?

Their big mega-budget $200 Million animated tentpole for Thanskgiving had a relatively obscure woman as the lead role; Ariana Debose, whose resume is rather thin with the last five years of her filmography featuring an "ensemble" gig in Hamilton and a gig in mega-flop West Side Story. Where the heck is the payroll cost on that?

Ariana DeBose - Wikipedia

en.wikipedia.org

Then there was The Marvels, who featured one B List movie actress in Brie Larson, and two C List TV actresses from either failed shows like Ms. Marvel or minor roles in older shows like Wandavision. Where the heck is the payroll cost on that?

Aside from Harrison Ford in super-mega-flop Indy 5 this past summer, I can't think of any high cost A List actor or actress that Disney has had in any of its mega-budget tentpole movies.

Don't get me wrong, B and C List TV actors have their place, and I had a flourish of excitement when I learned Dan Levy was in Haunted Mansion. But it was crushed when it was explained to me in the Haunted Mansion thread that he was just a very minor role who only had a couple minutes of screentime. As someone who was all in on Schitt's Creek since Season 1, I was crestfallen.

And so I say again... Where the heck does all that money go Disney spends on $200 Million to $300 Million movies???

 

[Disney Irish]

Huh?

Their big mega-budget $200 Million animated tentpole for Thanskgiving had a relatively obscure woman as the lead role; Ariana Debose, whose resume is rather thin with the last five years of her filmography featuring an "ensemble" gig in Hamilton and a gig in mega-flop West Side Story. Where the heck is the payroll cost on that?

Ariana DeBose - Wikipedia

en.wikipedia.org

Then there was The Marvels, who featured one B List movie actress in Brie Larson, and two C List TV actresses from either failed shows like Ms. Marvel or minor roles in older shows like Wandavision. Where the heck is the payroll cost on that?

Aside from Harrison Ford in super-mega-flop Indy 5 this past summer, I can't think of any high cost A List actor or actress that Disney has had in any of its mega-budget tentpole movies.

Don't get me wrong, B and C List TV actors have their place, and I had a flourish of excitement when I learned Dan Levy was in Haunted Mansion. But it was crushed when it was explained to me in the Haunted Mansion thread that he was just a very minor role who only had a couple minutes of screentime. As someone who was all in on Schitt's Creek since Season 1, I was crestfallen.

And so I say again... Where the heck does all that money go Disney spends on $200 Million to $300 Million movies???

If you were still a shareholder I'd have suggested you start a petition for an audit of the studios film budgets if you're really that curious. But since you aren't and only post about it here, I'm sure these questions will mostly go unanswered.

Also since none of the major shareholders are requesting the same audits I don't think many outside of this small Disney fan community care all that much.

Also specifically on The Marvels, I think I remember reading that talent costs were between $35M-$50M, which includes the A list actor Sam Jackson (since you care about that). So that leaves the rest for production costs and VFX. And we know that the MCU spends heavily on VFX.

 

[Tha Realest]

So that leaves the rest for production costs and VFX. And we know that the MCU spends heavily on VFX.

They are vastly overpaying. Victoria Alonso was fired for cause.

 

[Basil of Baker Street]

If you were still a shareholder I'd have suggested you start a petition for an audit of the studios film budgets if you're really that curious. But since you aren't and only post about it here, I'm sure these questions will mostly go unanswered.

Also since none of the major shareholders are requesting the same audits I don't think many outside of this small Disney fan community care all that much.

Also specifically on The Marvels, I think I remember reading that talent costs were between $35M-$50M, which includes the A list actor Sam Jackson (since you care about that). So that leaves the rest for production costs and VFX. And we know that the MCU spends heavily on VFX.

I would have to believe shareholders DO care that these bloated budget films are failing to cover cost. That would be absolutely bananas if they didn't.

 

[Animaniac93-98]

But now we’re going to hear how Disney is cheaping out on its films, doesn’t feature enough big-name actors, and the special effects aren’t what they used to be.

Disney SFX are already less than stellar right now, and that's with a staff so overworked and undervalued they've decided to unionize so they can be treated better by the company.

 

[Heppenheimer]

Don't get me wrong, B and C List TV actors have their place, and I had a flourish of excitement when I learned Dan Levy was in Haunted Mansion. But it was crushed when it was explained to me in the Haunted Mansion thread that he was just a very minor role who only had a couple minutes of screentime. As someone who was all in on Schitt's Creek since Season 1, I was crestfallen.

If I hadn't known prior that he was in it, I would have missed his cameo.

Owen Wilson and Danny Devito were in that film, though. Do you they still count as "A list"? LaKeith Stanfield has an Oscar nomination, so he couldn't have been extra cheap either.

I liked that movie more than I thought I would, but it was no classic.

 

[DKampy]

Huh?

Their big mega-budget $200 Million animated tentpole for Thanskgiving had a relatively obscure woman as the lead role; Ariana Debose, whose resume is rather thin with the last five years of her filmography featuring an "ensemble" gig in Hamilton and a gig in mega-flop West Side Story. Where the heck is the payroll cost on that?

Ariana DeBose - Wikipedia

en.wikipedia.org

Then there was The Marvels, who featured one B List movie actress in Brie Larson, and two C List TV actresses from either failed shows like Ms. Marvel or minor roles in older shows like Wandavision. Where the heck is the payroll cost on that?

Aside from Harrison Ford in super-mega-flop Indy 5 this past summer, I can't think of any high cost A List actor or actress that Disney has had in any of its mega-budget tentpole movies.

Don't get me wrong, B and C List TV actors have their place, and I had a flourish of excitement when I learned Dan Levy was in Haunted Mansion. But it was crushed when it was explained to me in the Haunted Mansion thread that he was just a very minor role who only had a couple minutes of screentime. As someone who was all in on Schitt's Creek since Season 1, I was crestfallen.

And so I say again... Where the heck does all that money go Disney spends on $200 Million to $300 Million movies???

I would think winning an academy award might raise your status which Brie Larson and Ariana DeBose has